infoTECH News

[May 14, 2014]

AUXILIO Inc. Reports First Quarter 2014 Financial Results

MISSION VIEJO, Calif. --(Business Wire)--

AUXILIO, Inc. (OTCQB:�AUXO) ("AUXILIO" or "the Company"), the nation's
pioneer and leading Managed Print Services (MPS) company for health
care, today reported financial results for the quarter ended March 31,
2014.

Non-GAAP measure of adjusted income from operations were 2% of revenue
in Q1 2014 vs. 3% in Q1 2013

Generated $0.1 million of cash flows from operations in Q1 2014

Added two new recurring revenue contracts in first three months of 2014

Signed one renewal contract in the first three months of 2014

"We carried the positive momentum from 2013 into the first quarter of
2014 which included the signing of two new health systems and a key
renewal," stated Joseph J. Flynn, president and CEO of AUXILIO, Inc.
"Our value proposition is becoming more evident as more hospitals seek
to outsource their print services to a trusted provider like AUXILIO,
proven to deliver superior service while reducing the total cost of
operating their print systems. We are also excited about expanding our
IT consulting services for hospitals by leveraging our strong customer
relationships with a network of new industry contacts through our
Consulting and Managed IT Services Group to further drive incremental
revenue and profit."

Financial Results

For the three months ended March 31, 2014

For the three months ended March 31, 2014, the company reported revenues
of $10.2 million, an increase of 2% when compared to $10.1 million in
the same period in 2013. Recurring service revenues increased 10% from
four new contracts implemented since the first quarter of 2013 and
expansion of services with existing customers. Equipment revenues were
approximately $0.4 million in the first quarter of 2014 compared to $1.2
million for the same period in 2013.

Cost of revenue was $8.5 million, essentially unchanged from the same
period a year ago. Gross profit for the first three months of 2014 was
$1.7 million, or 17% of revenues, compared to $1.6 million or 16% for
the same period of 2013. The gross margin improvement was a result of
more contracts moving beyond the initial implementation phase, which
require more upfront investment.

Operating expenses for 2014 were $1.71 million, an increase of 2% from
$1.67 million in the first quarter of 2013. Sales and marketing expenses
fell by 26% due to the termination of a joint marketing agreement with a
channel partner in 2013. General and administrative expenses increased
21% to $1.2 million due to non-recurring severance compensation and
additional travel incurred for the purpose of promoting customer
relations and extended new business development opportunities. The
Company generated $0.03 million of operating income in the first quarter
of 2014 compared to an operating loss of $0.1 million in first quarter
of 2013.

After excluding charges of $201,000 related to stock-based compensation,
the non-GAAP measure of adjusted income from operations for the three
months ended March 31, 2014 was $254,000 or 2% of revenue compared to
$323,000 or 3% of revenue after excluding charges of $197,000 related to
stock-based compensation and $190,000 in charges related to stock
granted for marketing and consulting activities in the same period of
2013.

Net loss for the three months ended March 31, 2014 was $71,000, or $0.00
per basic share, compared to a net loss of $230,000 or $0.01 per share,
in the same period of 2013. The weighted average diluted shares
outstanding increased to 22.3 million shares from 20.1 million in the
first quarter of 2013.

At March 31, 2014, the Company had $4.8 million of cash and cash
equivalents, up from $4.7 million at December 31, 2013. Cash provided by
operating activities amounted to $0.1 million compared to $1.0 million
during the same period in 2013. Net working capital improved to $0.5
million at March 31, 2014 compared to $0.3 million at December 31, 2013.

Paul Anthony, CFO of AUXILIO, explained: "We generated our sixth
consecutive quarter of positive adjusted income from operations. Our
achievement was impressive given the upfront investments we made in new
contracts and new business development opportunities. We will continue
to balance our goal of maintaining solid margins with investing
prudently in future growth initiatives."

Business Updates

Mark Dressel joined AUXILIO in March 2014 to head up the Company's new
Consulting and Managed IT Services Group. The Company is expanding
services beyond core MPS to meet the needs of existing and new customers
in the health care market. Mark will be responsible for driving new
sources of revenue from current and prospective customers through health
care consulting, IT sourcing and other high demand offerings; integrate
AUXILIO's MPS into strategic IT consulting opportunities; and develop
non-MPS health care-related opportunities. Mr. Dressel has more than 25
years of experience in developing innovative solutions for health care
companies. He served as Director and Global Practice Manager for Dell's (News - Alert)
Healthcare Consulting Group prior to joining AUXILIO.

Conference Call Information

CEO Joe Flynn and CFO Paul Anthony will host a conference call with
investors to discuss its first quarter 2014 earnings results.

A replay of the call will be available from 7:30 p.m. ET on March 14,
2014 to 11:59 p.m. ET on May 28, 2014. To access the replay, please dial
877-870-5176 from the U.S. and 858-384-5517 from outside the U.S. The
PIN is 4682383.

About AUXILIO, Inc.

AUXILIO is the leading provider of Managed Print Services for
healthcare. A true Management Services company, AUXILIO takes full
responsibility for health care customers' onsite print environment
through situation assessment, process analysis, strategy development and
program implementation. Hospitals and health systems benefit from
streamlined and aligned processes and infrastructure that result in
print management programs that reduce cost, increase employee
productivity and meet and exceed patient care standards.

Founded in 2004, AUXILIO serves a national portfolio in excess of 100
hospital campuses and manages over 1.3 billion documents annually from
more than 59,000 devices supporting over 250,000 caregivers. AUXILIO's
business model is vendor neutral, provides full-time, on-site customer
service and technical experts and is exclusive to the health care
industry.

This release contains certain forward-looking statements relating to the
business of AUXILIO, Inc. that can be identified by the use of
forward-looking terminology such as "believes," "expects,"
"anticipates," "may" or similar expressions. Such forward-looking
statements involve known and unknown risks and uncertainties, including
uncertainties relating to product/services development, long and
uncertain sales cycles, the ability to obtain or maintain patent or
other proprietary intellectual property protection, market acceptance,
future capital requirements, competition from other providers, the
ability of our vendors to continue supplying the company with equipment,
parts, supplies and services at comparable terms and prices and other
factors that may cause actual results to be materially different from
those described herein as anticipated, believed, estimated or expected.
Certain of these risks and uncertainties are or will be described in
greater detail in our Form 10-K and Form 10-Q filings with the
Securities and Exchange Commission, which are available at http://www.sec.gov.
AUXILIO, Inc. is under no obligation (and expressly disclaims any such
obligation) to update or alter its forward-looking statements whether as
a result of new information, future events or otherwise.

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AUXILIO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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MARCH 31, 2014

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DECEMBER 31, 2013

(unaudited)

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ASSETS

Current assets:

Cash and cash equivalents

$

4,752,319

$

4,668,624

Accounts receivable, net

3,592,189

3,856,791

Supplies

1,039,388

967,354

Prepaid and other current assets

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345,859

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332,759

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Total current assets

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9,729,755

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9,825,528

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Property and equipment, net

151,222

160,709

Deposits

34,413

34,413

Loan acquisition costs

29,236

51,162

Goodwill

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1,517,017

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1,517,017

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Total assets

$

11,461,643

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$

11,588,829

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LIABILITIES AND STOCKHOLDERS' EQUITY

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Current liabilities:

Accounts payable and accrued expenses

$

5,231,390

$

5,057,339

Accrued compensation and benefits

1,130,925

1,556,513

Line of credit

400,000

400,000

Deferred revenue

848,397

868,186

Convertible notes payable, net of discount of $47,000 and $82,250 at
March 31, 2014 and December 31, 2013, respectively

1,553,000

1,617,750

Current portion of capital lease obligations

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64,960

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71,933

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Total current liabilities

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9,228,672

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9,571,721

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Long-term liabilities:

Capital lease obligations less current portion

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32,692

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46,558

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Total long-term liabilities

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32,692

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46,558

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Commitments and contingencies

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Stockholders' equity:

Common stock, par value at $0.001, 33,333,333 shares authorized,
20,743,966 and 20,643,966 shares issued and outstanding at March 31,
2014 and December 31, 2013, respectively